I am a reporter and researcher focused on energy, political and economic issues in the Mediterranean and have spent much of the last fifteen years working and reporting from the region. Over the last several years, my work has focused on all facets of the energy sector, including investment, development and policy issues. I am a graduate of the University of Texas’ School of Journalism and New York University’s Center for European and Mediterranean Studies graduate program. https://twitter.com/coatschristophe

Spanish Solar's Lasting PV Hangover

It was clear from the beginning – from the early days of Spain’s prolonged fiscal crisis – that the country’s solar sector would take a hit of some sort. After all, it had been blessed for too long with what many called unsustainable incentives to keep it thriving and growing into the force it was expected to be. Meanwhile, utilities were locked into selling power for regulated prices in exchange for later support from the government, which helped build an enormous sector deficit. Something was going to have to give, that much was clear. Solar proponents just hoped it would be quick, clear and concise.

But, three years on, the once powerful solar sector is still taking its lumps, leaving it beaten, battered and now begging for a bit of mercy. At least that’s the story the country’s solar PV sector told Brussels earlier this month. Citing what they called “harassment”, representatives of National Association of Renewable Energy Producers and Investors (ANPIER) appealed to Tatiana Marquez Uriarte, the Assistant to the Director General, DG Energy at the European Commission to help ease national policies that they say will kill the country’s PV producers. The Association’s complaints focused on Madrid’s adjustments to feed-in tariffs, threats of retroactive action and a new 7 percent energy production tax. The tax was introduced late last year as the latest attempt to reign in what has become a near-paralyzing amount of sector debt.

A Year of Cuts and Then What?

Over the course of the year since the right of center government of Mariano Rajoy and the Partido Popular took office, the country’s energy sector solutions have continued to cause a stir. After signaling that they would not reverse course from the previous administration’s approach of further cuts to deal with a daunting $30 billion sector deficit, the new leadership signaled that they would likely be taking a harder line. This included the new seven percent tax aimed at energy producers and suggestions that cuts to government subsidies for renewable energy options could include retroactive actions. So far, the government’s actions have had little effect on deficit reduction. Instead of reduction, the deficit actually grew at double the expected rate for 2012.

Despite the increase’s share related to existing renewable incentives, Spain’s Association of Renewable Energy Producers released a statement earlier in the month arguing that the deficit increase had little to do with solar-specific programs. Instead, they argued that an increase in energy output and the inclusion of “technologies like co-generation and waste treatment” in the calculation of government support.

Back in Brussels, ANPIER representatives warned that the actions had already resulted in a 30 percent loss in revenue and if expanded, would drive about 80 percent of the country’s panel producers into bankruptcy.

However, Spain’s Industry Minister Jose Manuel Soria countered ANIPER’s claim, stating that the current government had not even considered retroactive cuts to solar energy in Spain, suggesting that any panic about an impact on PV producers was premature. A proposal to retroactively reduce PV incentives introduced under the previous government of Jose Luis Zapatero spurred a quick reaction from solar proponents and investors, over a dozen of which responded with lawsuits, alleging that the action was illegal.

Are Cuts the Only Culprit?

While Soria’s actions related to renewable energy have offered little hope for the sector’s growth prospects (cuts, cuts and more cuts), it may not be entirely fair to hoist all the blame for coming bankruptcy on his shoulders. After all, late last year saw the European Commission and China exchange shots at each other amid allegations of product dumping and unfair government support from Beijing. The very same EC that ANPIER is appealing to argued last year that below market PV panels were being dumped on the European market, driving down prices across the continent more than 24 percent.

China struck back with a formal complaint with the WTO, taking aim at member states including Greece and Italy. The complaint accused the countries of offering a higher electricity tariff rates for domestic panel producers who used local components.

While the cuts in incentive programs in Spain may have had a hand in slowing investment interest in the country’s solar sector, the sharp drop in panel prices is just as likely a culprit when talking about the weakness of the PV sector.

In the coming weeks, this column will take a look at what good news is managing to emerge through Spain’s financial and renewable crisis.

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